savings

How to Raise Money-Savvy Girls

When parents talk to their kids about money, they often speak differently to their sons and daughters.

In my March Money Smart Women column, Retirement Tips for a Long Lifetime, I promised that I would weigh in on how to raise money-smart girls. That prompted an e-mail from Anne Chernish, a certified financial planner in Ithaca, N.Y., who volunteered her daughter Sydney, 32, as an example.

When Sydney was about 3 years old, Anne says she began “dropping little hints” about money into her conversations with her daughter. For example, she would ask Sydney to think about where her money came from and what she did with it. As Sydney grew, Anne encouraged her to write thank-you notes for cash gifts, earn money by doing small jobs and save money from her allowance. By the time Sydney was 10 or 12, she and her mom were talking about stocks.

Now a brand manager for Diageo, Sydney has “the perfect financial plan,” says her mother. She saves money automatically every month, maximizes her retirement plans at work and is fully invested in the stock market. Says Anne, “The key with kids is keeping it short, not getting into too much detail, and repeating.”

As the mother of a money-smart daughter (and two sons) and the author of Raising Money Smart Kids, I second Anne’s observations, which match what I’ve learned from my own experience and that of hundreds of parents I’ve spoken with over the years. Small lessons have a big impact, and parents—and grandparents—play a key role in teaching those lessons. Adults often feel awkward talking about money with kids. But the earlier you start, and the more you can make money matters a natural part of everyday discussions, the easier the conversation.

The gender gap. Unfortunately, even when parents do talk to their children about money, there’s evidence that they often speak differently to their sons and daughters. A survey by Charles Schwab, for example, found that parents emphasize saving and budgeting with their daughters but are more likely to discuss investing with their sons. So it’s not surprising that women are less likely than men to feel comfortable about investing.

That presents a golden opportunity for Kiplinger’s readers, such as Tony Hausner, who is also past president of the Washington, D.C., metro chapter of the American Association of Individual Investors. Hausner once asked me if it made sense to buy his 6-year-old granddaughters shares in a stock such as Disney to introduce them to the stock market. My response: Go for it!

Research shows that women don’t lack financial competence, but they express less confidence than men when it comes to money matters. It doesn’t help that they’re less likely than men to talk about money with their friends, which puts them at another disad­vantage (see Getting Women to Talk About Money). So getting an early start is as much about boosting girls’ con­fidence as increasing their financial knowledge.

As a hands-on way of learning to manage money, nothing beats an allowance that comes with certain spending and saving responsibilities. Resist the temptation to shield your daughters from those responsibilities; they need to feel comfortable handling their own money so they aren’t tempted to cede that job to someone else when they get older.

When it comes time for your daughter to get her first summer job, help her prepare a résumé that showcases her talents and interests. And rehearse with her so she knows how to speak up during a job interview.

Never underestimate the importance of role models, whether that’s you or someone else. I once attended an investing boot camp for teenage girls conducted by female financial advisers. Besides asking questions about the markets, the girls were curious about how the advisers got their jobs. When they discovered that one had once been a ballet dancer and another had been in retail sales, it was as inspirational for the teens as anything they learned about stocks and bonds.

Most Popular

In What Order Should You Tap Your Retirement Funds?
retirement planning

In What Order Should You Tap Your Retirement Funds?

Should you go with your IRA first or your brokerage account? Pulling money haphazardly can have negative implications. Instead follow this road map fo…
June 28, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
5 Ways to Prepare for a Recession
recession

5 Ways to Prepare for a Recession

The signs seem to be pointing in one direction these days, so if you’re worried about being ready for a recession, consider taking these five measures…
June 28, 2022

Recommended

How Big Should My Emergency Fund Be?
Brandon Copeland

How Big Should My Emergency Fund Be?

NFL linebacker and Kiplinger contributing editor Brandon Copeland discusses the importance of building an emergency fund.
June 30, 2022
Financial Advice from America’s Founding Fathers
credit & debt

Financial Advice from America’s Founding Fathers

What money-management guidance can we glean from the words — and experience — of Benjamin Franklin, Thomas Jefferson, Alexander Hamilton and others?
June 30, 2022
Beneficiary Designations: 5 Critical Mistakes to Avoid
retirement

Beneficiary Designations: 5 Critical Mistakes to Avoid

You may be surprised at how easy it is to make an expensive mistake with your beneficiary designations. Here's how to help avoid the five most common …
June 6, 2022
30 Best Kirkland Products You Should Buy at Costco
Costco

30 Best Kirkland Products You Should Buy at Costco

Many of warehouse club Costco's store-branded Kirkland Signature items get high marks for quality and value. Check out our picks.
June 3, 2022